IFRS9 is a prime example of how risk and finance have become more closely integrated. IFRS9 offers a forward-looking dimension of credit loss provisions, which is changing calculations from being static (historical) to a much more dynamic (progressive) in nature.

IFRS9 affects more than just financial institutions. Any entity could have significant changes to its financial reporting as a result of this standard.

With careful planning, the changes that IFRS9 introduces might provide a great opportunity for balance sheet optimization, or enhanced efficiency of the reporting process and cost savings.

For institutions with significant lending activities in their portfolios, the expected credit loss is the single most important provision that has a direct impact on a company’s profit and loss. The justification of those provisions to all stakeholders are critical for maintaining a positive image of the institution.